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CloudFlare to open a data center a week in 2015

Data center
Baran Ozdemir | Vetta | Getty Images

CloudFlare is on a mission to protect millions of websites around the world from the most sophisticated cyber-attacks. That requires a lot of data centers, so the company plans to open one a week in 2015.

"If you fast forward 10 years, we'd like to be in every cell phone tower base station," said Matthew Prince, co-founder and chief executive officer of San Francisco-based CloudFlare. "The goal is to get as close as possible to the end users of the Internet. That allows us to deliver massive performance and security benefits."

Since launching in 2009, CloudFlare has been growing with speed, doubling headcount every year and expanding revenue even faster. The company's software combines website security with Internet routing and content delivery, enabling webmasters to direct all traffic through the service in a matter of minutes. Over 1.5 million sites use CloudFlare.

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To offer security and maximum speed, CloudFlare has data centers across the globe. it buys cheap commodity boxes and loads them up with its own networking and security software.

The company is currently in 30 facilities, including 10 in North America, another 10 in Europe and four in Asia. By the end of next year, the total will be 82, Prince said. Many of the new locations will be in Asian cities, including Bangkok, Jakarta and Chengdu.

Meanwhile, Prince plans on doubling the number of employees to 256 in 2015 as he builds out the sales team. CloudFlare's business model is much different than a traditional enterprise software company in that 95 percent of its customers don't pay anything. In a few quick steps, free users just sign up and direct their traffic to go through CloudFlare's machines.

For the 5 percent of paying customers, the company has three plans, starting at $20 a month and going up to the enterprise product, which averages $5,000 a month. Customers include Goldman Sachs, Wells Fargo and Cisco Systems, and Prince said the company will be on pace for $100 million in annual revenue at some point next year.

Prince said that 80 percent of the costs of the business go to serving the company's paying clients. At the enterprise level, that includes providing dedicated account managers, 24-hour phone support and setup consultation.

CloudFlare has raised $72 million, with the bulk of that coming in a $50 million funding round in late 2012. Prince said all of the cash from the latest financing is still in the bank. Unlike most fast-growing subscription software businesses, which take a year to earn to back the revenue on every sale, CloudFlare's deployments pay off in six months, Prince said.

With that level of profitability, CloudFlare is able to invest in growth, which helps explain why the company has aggressive plans for data center expansion. Prince said that most of its equipment will be placed in large data-center colocation facilities around the world and alongside Internet service providers.